Earlier in NY, the U.S. dollar rally stalled against the Japanese yen on disappointment President Trump’s tax reform plan. No surprises were announced as he expects to cut the income tax rate paid by public corporations from 35% to 15% and reduce the top tax rate assessed on pass-through businesses, including sole proprietorships and small partnerships, from 39.6% to 35%, earlier speculation thought it would drop to 33%.
The USD/JPY daily chart shows that price formed a bullish Gartley Pattern on April 17th. Point C was confirmed with the 50% Fibonacci retracement of the A to B leg, while Point D was targeted with both the 61.8% Fibonacci retracement of the X to A leg and the 200% Fibonacci expansion level of the B to C move. Yesterday’s rally stalled right at the 50-day SMA. If we see one last push lower, price may find support from the 109 level. If the bullish momentum returns key support will come from the 113.50 region. Major resistance will come from the 114.90 to 115.50 region.
The trade: Buy USD/JPY 107.75, with a stop loss at 106.75 and take profit at 110.75. The risk/reward ratio is 1:3